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On Friday at 1:30 pm GMT we will see Uncle Sam’s labor market numbers for the month of February.

Will we see a sustained recovery? Or are we in for spotty results?

Check out the top three questions the event will answer for us this week:

How’s the labor market recovery going?

January’s labor market numbers did NOT give the “new year, new me” vibes last month.

See, Uncle Sam may have added a net of 49K jobs (vs. 50K expected) but both November (-72K) and December’s (-87K) numbers were revised down from their initial readings. The jobless rate was also a bust with its downgrade from 6.7% to 6.3% mostly due to laborers leaving the workforce.

USD Overlay of 15-Min Charts
USD Overlay of 15-Min Charts

This week we’ll see if the labor market recovery gains momentum from December’s lockdown-related net job losses.

Analysts see the non-farm payrolls (NFP) at 170K, with participation rate inching higher from 61.4% to 61.5% and the unemployment rate (6.3%) and average hourly earnings (0.2%) maintaining January’s pace.

Did the leading indicators get the labor market trends right?

Markit’s manufacturing PMI cheered the rebound of demand and business confidence, which led to employment growing at its “steepest rate since September 2014.

ISM’s manufacturing PMI pretty much said the same thing and noted that improved new order and backlog levels point to “employment strength for the rest of the first quarter.

The services sector isn’t as positive though. Markit’s services PMI noted that COVID-19 and travel restrictions continue to weigh on foreign demand and has contributed to job creation easing to its slowest growth in eight months.

ISM’s services PMI also reported the slower growth but hinted that the lack was mostly due to restrictions making it hard for employers to fill vacant positions.

Meanwhile, the ADP report showed a 117K increase in February (markets are expecting 170K for the NFP!) after January’s upwardly revised 195K jump. The services sector made up the bulk of the job creation as manufacturing demand moderated and reopenings boosted services-related work.

Do dollar traders still care about the NFP these days?

It looks like the official NFP might not hit the expected 170K. But will it matter to dollar traders?

Last month’s disappointing numbers led to the dollar ending the day lower across the board.

This week, we’ll see if a weaker than expected report would make a dent in the dollar’s recent gains. If you recall, rising U.S. Treasury yields and global growth concerns are making the Greenback so hot right now.

USD 7-Day Performance
USD 7-Day Performance

If we see a significantly weaker NFP, dollar bulls could say, “Dude. A weak economy AND the Fed going brrrr? Time to bail!”

But if February’s labor market numbers hint at a positive momentum, or if progress on the latest stimmy bill boosts demand for dollar-denominated assets, then the Greenback could extend its gains against its major counterparts.